How the FTC could keep fighting Facebook

While a federal court delivered Facebook a reprieve on Monday by dismissing an antitrust case by a group of state attorneys general and a separate complaint by the Federal Trade Commission, its court battles may not be over just yet.

U.S. District Judge James Boasberg dismissed the states’ case entirely, explaining in a court filing that they waited too long to challenge the company’s acquisitions of Instagram and WhatsApp, which were completed over a half a decade before their complaint. But in dismissing the FTC’s complaint, he left the door open for the agency to refile its claims against Facebook, while laying out a blueprint for how it might better plead its case.

Facebook said in a statement on Monday it was “pleased” by the court’s ruling, adding, “We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”

The judge’s decision sent Facebook shares up more than 4% on Monday, bringing Facebook’s market cap across the $1 trillion mark for the first time.

A spokesperson for the FTC said the agency “is closely reviewing the opinion and assessing the best option forward.”

Here are the three options the FTC still has if it wants to pursue its case against Facebook:

Boasberg gave the FTC a chance at a do-over, saying it could file an amended complaint by July 29. If the agency closely follows the court’s guidance about which parts of the complaint need more detail or could hold more water, that could give the FTC another shot at pursuing its claims against Facebook.

To do this, the FTC may decide to narrow its claim to focus squarely on Facebook’s 2012 and 2014 acquisitions of Instagram and WhatsApp, respectively. Boasberg indicated the FTC does have the ability to challenge long-completed mergers, even after failing to block them following a lengthy reviews at the time Facebook pursued them.

While he declined to speculate on how the timing of the challenge would impact its success, Boasberg disagreed with Facebook’s claim that the FTC could not seek an injunction over these earlier mergers under anti-monopoly law.

Boasberg was less convinced by the FTC’s claims that Facebook maintained its monopoly in the personal social networking market by preventing rivals or potential rivals from accessing certain tools on its platform. The agency could choose to remove this aspect of the complaint or present more evidence to support it.

The FTC would also likely have to clarify its market definition of a personal social networking service if it chooses to revise its claims in federal court. Boasberg took issue with how the FTC defined that market and said it was unclear how it arrived at the conclusion that Facebook holds more than 60% of that market, adding that the number and its reasoning were vague.

The FTC could also choose to move its claims before the agency’s own administrative law judge rather than attempt to continue the case in federal court. The agency reportedly considered this option before filing its initial complaint in federal court, according to Politico, and the agency’s chairman at the time initially favored that route.

That option would give the FTC a bit more control over the case, though a looming departure of one of the commissioners could complicate its outcome. According to the FTC website, the ALJ would issue an initial decision based on the proceedings, which can be appealed up to the full commission. After the five-person commission reaches its final decision, it can be appealed in federal court.

For now, pro-enforcement Democrats hold the majority in the commission, with progressive Lina Khan newly serving as the head of the agency. But Democratic Commissioner Rohit Chopra is expected to leave the agency assuming his nomination to lead the Consumer Financial Protection Bureau is confirmed by the Senate.

That would likely leave the agency in a 2-2 deadlock until President Joe Biden nominates and the Senate confirms a new commissioner. Both current Republican commissioners voted against filing the initial lawsuit against Facebook.

Still, the commissioners are expected to decide Thursday during an open meeting whether to revoke a 2015 policy statement. The statement essentially narrowed the scope of cases the agency was most likely to bring under Section 5 of the FTC Act to those already unlawful under existing antitrust law.

Section 5 generally allows the FTC to pursue cases involving “unfair methods of competition in or affecting commerce.” Revoking the earlier statement could make it easier for the FTC to bring more expansive claims against Facebook through its in-house process.

A final choice the FTC could make is to drop the case against Facebook, at least for now. Antitrust cases are resource-intensive and the cash-strapped agency is already reportedly eyeing Amazon over competition claims. The agency could decide to cut its losses and perhaps pursue other enforcement strategies against the company, including through its consumer protection bureau.

Antitrust enforcement advocates and lawmakers who have pushed for revisions to antitrust doctrine pointed to Boasberg’s opinion as proof that the law must be changed address current-day competition issues. House lawmakers passed six major antitrust bills out of the Judiciary Committee last week, though their future remains uncertain in light of bipartisan pushback.

Still, enforcement advocates have maintained that current law should still support antitrust challenges against companies like Facebook. Under new leadership, the FTC may be reluctant to drop a case that has already gotten to this stage as lawmakers maintain pressure for it to step up enforcement.

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